Applying the Three True Outcomes to the CSN Houston Fiasco

The Houston Astros are in week two of the regular season. The Houston Rockets regular season is quickly coming to an end. This makes for two years that the Rockets games have not been available for most Houston viewers, and it's the start of the second year that Astros games mostly haven't been available. And neither the Astros nor Rockets are receiving their media rights fees because CSN Houston is bankrupt.

The parties gathered for mediation with Judge Lynn Hughes two weeks ago. They had further mediation discussions this past Monday, and there is a scheduling order requesting the parties return to the judge's chambers for mediation on Friday morning. The parties aren't talking, so who knows what's going on in these discussions, though the fact that mediation talks continue should give some cause for optimism.

This whole fiasco has been hashed and rehashed time and time again since the involuntary bankruptcy filing, and before that, since the time the network went on air. But let's take a look at this in a new way, applying the baseball thinking known as the three true outcomes of strikeout, walk, and home run.

Yes, Chris Carter's at-bats can be analogized to the CSN Houston fiasco

THE STRIKEOUT:

Like a Chris Carter at-bat, the strikeout is the most likely scenario for CSN Houston, which means the network will cease to exist. This will come about because the parties cannot agree to a workable business plan to guide the network through bankruptcy, leaving only one alternative: going out of business.

The Astros and Rockets will regain their media rights, and odds are they will shop them out to the highest bidder, more than likely resulting in a return to Fox Sports Southwest. But with little leverage and an awful product (from the Astros), these rights fees will likely not match what the parties were supposed to get from CSN Houston or what they would have received several years ago, back before CSN Houston came into being.

Neither of the teams will receive all of what they're owed in unpaid rights fees from the shuttered network. Network employees will be out of work (the team broadcasters will stay with the teams on the new network). And odds are, as part of getting money owed to them by the network, the Astros will drop Comcast from its fraud lawsuit against Drayton McLane.

THE WALK

As with a Chris Carter at-bat, this is the least likely scenario. But there is a slight possibility, so...

There has been talk of another entity like DirecTV or U-Verse buying a share of the network, or buying out one of the parties. DirecTV owns several Regional Sports Networks throughout the country (the ROOT sports networks are owned by Direct TV and affiliated with Fox Sports Net), and back before the formation of CSN Houston and the partnership with Comcast, there were rumors that DirecTV was interested in forming a network with the teams. Since the bankruptcy, there have been continued rumors of DirecTV angling for an ownership stake as part of bailing out the network. This would get both teams on the air throughout most of Houston, and with DirecTV and Comcast airing the network, U-Verse and the other minor cable companies would have no choice but to sign up for carriage deals.

Of course, this whole analogy could be the equivalent of a Chris Carter strikeout

Expect this new entity to become another version of Fox Sports Southwest. And we all remember what a crappy product Fox Sports Southwest produced, with a heavy emphasis on the Dallas/North Texas portion of the network that was grudgingly interrupted for Astros or Rockets games.

THE HOME RUN

A towering home run is the best thing that can result from a Chris Carter at-bat. And with CSN Houston, that towering home run would result in the Houston Rockets buying out the Astros and taking over majority control of the network.

At one time, it appeared that Comcast's whole plan was to be the party purchasing a majority ownership stake of the network (the Rockets would've probably stayed around as a minority owner with no voice in network management). But Comcast has supposedly withdrawn it's offer to purchase the network. The Astros could still make an attempt to buy out Comcast and take majority control, but past media statements from the Astros seem to make it clear that the Astros have no interest in owning/running the network and would like its ownership share bought out.

The Rockets, however, have expressed some desire to purchase the network. Such a purchase would give the Rockets control of the network, and put the team in charge of negotiating carriage deals. With majority control, the Rockets would not have to worry about the Astros needs for high carriage fees to offset what the Astros see as a bad media rights deals. The Rockets would then be able to negotiate a deal along the lines of what it supposedly worked out with DirecTV not long after the network went on the air. The Rockets would have to eat short term losses, but as the Baltimore Orioles have shown with its ownership of MASN, the big money comes not from rights fees but from the combination of carriage fees and sales/advertising revenue.

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The deal to buy out the Astros would more than likely include the Rockets and/or Comcast paying the Astros all of the money owed in past due rights fees as well as an increased rights fees for upcoming seasons. The Astros would assume the same role at the network as it had with Fox Sports Southwest, filling in programming but having no editorial voice in non-game decisions. Comcast would also lose management control and would just operate the network, make sure programming gets out on the air, and provide support/personnel for all non-Rockets/Astros programming. And it can only be assumed that the Astros would have to drop Comcast from the Drayton McLane lawsuit.

FINAL THOUGHTS

Les Alexander was not a part of the Monday discussions -- other executives from the Rockets took part -- but Jim Crane and the Comcast executives who were at the first mediation did take part on Monday. What's the significance of this? Probably nothing. But it could indicate what most people have thought since the beginning, the problem is not the Rockets, and as such, the head guy's not needed because a deal involving the Rockets has been worked out, and the Rocket execs were only listening in to make sure the Rockets interests were protected while the Astros and Comcast continue arguing about their crap.

If that is so, this whole fiasco could be close to an end date. It's also possible, and most likely, that this is no closer to an end date than it was when the network went on the air in October 2012. Which I guess, would mean I'm no better at reading the tea leaves of the CSN Houston mediation than Chris Carter is at hitting the baseball.

John Royal is a native Houstonian who graduated from the University of Houston and South Texas College of Law. In his day job he is a complex litigation attorney. In his night job he writes about Houston sports for the Houston Press.

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